Goldman cuts Q4 EPS estimates for petchem makers

05 January 2007 15:17  [Source: ICIS news]

TORONTO (ICIS news)--Goldman Sachs has cut its fourth-quarter earnings per share (EPS) estimates for leading North American commodity chemicals makers, citing margin erosion and volume declines, a the analysts said in a research note on Friday.

 

“Fourth-quarter results should prove challenging for commodity chemical producers owing to margin erosion and a sharp decline in volumes as customers deferred purchases in anticipation of lower prices,” Goldman said.

 

In addition, demand was significantly impacted by deterioration in polyvinyl chloride fundamentals on the back of the declining in US housing market, it added.

 

Goldman said that it reduced its fourth-quarter EPS estimate for Dow Chemical by 5 cents to 93 cents; for Lyondell by 13 cents to 67 cent; for Westlake by 34 cents to 31 cents; and for NOVA Chemicals to a loss of 16 cents, from a positive of 84 cents.

 

Goldman added that going into 2007, the market appears to have stabilised somewhat.

 

“We expect inventory restocking to occur in January and February, allowing producers to partially implement announced price increases, mainly for small volume buyers,” it said.

 

Still, 2007 is set to be a challenging year for North American petrochemicals makers, the analysts said.

 

($1 = €0.76)

By: Stefan Baumgarten
+1 713 525 2653

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